3 Dividend Champion Stocks I'm Watching in 2025

If you are looking for high-yield stocks in a stock market that is hovering near all-time highs, a good place to start your search is with reliable dividend payers.

Dividend Champions fit the bill with at least 25 consecutive annual increases.

But don't stop there; focus on the Dividend Champions with historically high yields. That list today includes retailer Target (NYSE: TGT), packaged food maker Hormel (NYSE: HRL), and beverage and snack giant PepsiCo (NASDAQ: PEP).

Here's a look at each one.

1. Target is making changes to get back on track with consumers

Target has increased its dividend annually for more than five decades, which not only makes it a Dividend Champion but also a Dividend King. The retailer is a big box store, selling various items from hardware to groceries. But it has a specific focus on offering a more upscale shopping experience. That has it out of step with consumers today, who are generally trading down to cheaper stores.

This isn't the first time Target's focus on a slightly more affluent shopper has been out of step over the last 50 years. The board of directors has brought in a new CEO to shake things up, with the company taking a team approach to revamping its business plan. If history is any guide, Target will eventually get back on track.

There has been some early improvement, too, with the second quarter of 2025 showing better sales and traffic results than the first quarter.

If you are willing to give management the benefit of the doubt, you can collect Target's lofty 5.1% dividend yield. That yield is near the highest levels in the retailer's history and even higher than the yields seen during the pandemic and the Great Recession.

2. Hormel has brought back old blood to foster change

Hormel is another Dividend King with a historically high dividend yield. This food maker is best known for producing Spam, but it has a collection of industry-leading brands and a heavy focus on protein. Given the shift toward protein right now, you might think Hormel would be hitting on all cylinders. It isn't, and its stock is down materially, pushing the yield to an attractive 4.8%.

Hormel stands out from most other companies, however, because one shareholder controls nearly 47% of the common stock. That shareholder is The Hormel Foundation, which uses the dividends it collects to support its philanthropic efforts. Simply put, The Hormel Foundation has the same general goal as most dividend investors -- a reliable and slowly growing dividend.

This is important because the involvement of The Hormel Foundation means that Hormel the company doesn't need to make short-term decisions to appease fickle Wall Street. For example, its big move during this difficult time was to bring back an old and trusted CEO with the task of shoring up the business and training a new leader to take over.

The turnaround here could be lengthy, but given the reliable history of success the company has achieved, notably with the dividend, it is probably worth giving Hormel the benefit of the doubt.

3. PepsiCo has an activist ramping up the pressure for change

PepsiCo is another stock that is not only a Dividend Champion but also a Dividend King. And, like Hormel and Target, its yield is near historical highs at around 4%. That said, PepsiCo operates at a much larger scale, as it is one of the largest consumer staples companies on the planet. It is best known as the maker of the beverage Pepsi, but it also makes Frito-Lay snacks and Quaker Oats packaged food products.

PepsiCo's business approach differs materially from its closest beverage rival Coca-Cola in that PepsiCo largely owns its bottling operations and Coca-Cola does not. PepsiCo is using the usual playbook to address the difficulties it currently faces, including buying on-target brands like Siete and Poppi. But it also has an activist investor pushing for management to exit its bottling assets to unlock value for shareholders.

That could be a near-term catalyst for an improved stock price. But given the track record of the business, even if that bottler change doesn't take shape, the company is making business moves that will eventually get the company back in-line with consumer buying habits. Either way, buying the lofty dividend yield here could leave you with a long-term winner.

No guarantees on Wall Street, but trends do matter

Companies cut their dividends all the time, but long and impressive dividend histories do have value. They show that a company believes the dividend is important to protect even when times get tough. The times are tough right now for PepsiCo, Hormel, and Target. But if history repeats itself again, they will all survive and support their historically high dividends along the way. And that could make them well worth watching in 2025, if not buying.

Reuben Gregg Brewer has positions in Hormel Foods and PepsiCo. The Motley Fool has positions in and recommends Target. The Motley Fool has a disclosure policy.